Firing Andrew Mason Won’t Save Groupon

As soon as word got out that Groupon (GRPN) had fired founder and Chief Executive Officer Andrew Mason, shares in the company spiked. Investors apparently agree with Mason’s assessment that he was the problem, or, as he wrote in his public and unusually confessiona lgoodbye note to employees: “You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I’m getting in the way of that. A fresh CEO earns you that chance.”

In fact, Mason almost marvels that he was allowed to stick around so long. As he wrote: “From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves.”

He’s right. What’s not so clear is his assertion that his exit paves the way for a revival of the online deal site. Even if employees are working together beautifully and doing amazing things, as their former boss suggests, that doesn’t change the reality that Groupon’s problems probably stem as much from its business model as from its leadership. From the start, it was a great idea that proved all too easy to replicate.

For merchants, the perils of Groupon and sites like it have become clear. Small businesses have often found themselves overwhelmed with deal seekers who alienated loyal customers and rarely came back. Large companies, from department stores to hotel chains, have discovered the logic of controlling their own deals or working with partners who deliver more than just an audience for a big fee. And the rest of us? There are only so many half-price Thai food offers one can stomach before Groupon e-mails start to look like spam.

To be fair, Groupon and Mason were not oblivious to all this. The Chicago-based site has been expanding from just hawking deals to selling actual stuff. That’s proved successful for, say, Amazon.com (AMZN), EBay (EBAY), and countless other sites. It doesn’t necessarily bode well for Groupon, whose success was built on fickle folks trying to save a buck.

In firing Mason, Groupon has lost one of the most interesting things it had left. How many CEOs buy a pony for their guests, as Mason did when Michael Bloomberg (the founder and majority owner of Bloomberg LP, publisher of Businessweek.com) visited Groupon’s Chicago headquarters? Who tweets about their firing with the cryptic, “Apparently, sharing oranges is necessary but insufficient”? Or defends his tenure by noting, “If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through.” We’ll miss that.

BusinessWeek